The Corporate Insolvency and Governance Act 2020 restricted the use of statutory demands and winding-up petitions to allow businesses to recover from the impact of the COVID-19 pandemic.
However, from today, 1 October 2021 until 31 March 2022 (the Relevant Period), the current restrictions on statutory demands and winding-up petitions are being relaxed, however it is not a return to the pre-pandemic situation.1
There are also new conditions that are required to be satisfied in order for a creditor to present a winding-up petition.
The conditions that must be satisfied to present a winding-up petition are as follows:
- The debt owed to the creditor (or a group of creditors if petitioning together) has to be at least £10,000.
- The creditor must write to the debtor and provide a written notice seeking a satisfactory proposal from the debtor for the payment of the debt owed (known as a “Schedule 10 Notice”). The proposal must be made by the debtor within 21 days of the delivery of the Schedule 10 Notice. The Schedule 10 Notice must state that if no satisfactory proposal is received then the creditor intends to petition and wind-up the company. It is also possible to make an application to the court for an order that they do not need to deliver a Schedule 10 Notice or give the debtor 21 days to make a satisfactory proposal.
However, despite hoping that the existing restrictions would be lifted for commercial landlords, they will continue to apply. This means that commercial landlords will be unable to present a winding-up petition against a company for rent arrears as a result of the financial effect of COVID-19. In their press release, the Insolvency Service stated that it was to ensure commercial tenants are protected from eviction whilst “the government implements a rent arbitration scheme to deal with the commercial rent debts accrued during the pandemic.”2
If you would like to discuss any of the issues addressed in this article then please do contact a member of our dispute resolution team who would be happy to help.
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.